The euro fell on Wednesday on concerns a political crisis in debt-ridden Portugal could force the government to seek aid, though losses in the single currency should be limited amid expectations of rising eurozone interest rates. The euro eased from a 4-1/2-month high against the dollar set on Tuesday after failing to break through options barriers in the $1.4250 area. Analysts said the euro could dip below $1.40 in the short term, before rising toward $1.4280, the November high.
The euro was last down 0.6 percent at $1.4121 after hitting a low for the session of $1.4105, according to trading platform EBS. Adding to bearish sentiment was a document showing European leaders will decide on how to increase their bailout fund only in June, not this week. Sterling fell 0.8 percent to $1.6244, hitting the day's low as Britain lowered its growth projections for the coming year and increased borrowing targets. The dollar was down slightly against the yen at 80.96, with markets wary of intervention by authorities to curb yen strength. A fall below the 80 to 80.50 area could see officials return to the market to sell the Japanese currency.